Ace fund manager Neil Woodford has been delivering many happy returns to investors for years, and now it seems he has done it again.
His eponymous vehicle, CF Woodford Equity Income, was launched at the start of June last year and is just days away from marking its first birthday.
Confirmed Woodford fans who poured billions into the fund at launch won’t be surprised to discover that there is already plenty to celebrate.
Oops, He Did It Again
Since launch, his fund has grown more than 20%, roughly double the 10% average return across its benchmark UK equity income sector.
And this isn’t just Woodford making hay while the sun shines. Over the same period, the FTSE 100 index, from which Woodford plucks many of his fund’s holdings, grew just 1.6%.
Even if you throw in the average 3.5% yield on the index over that time, the FTSE’s total return is only a fraction over 5%.
Woodford is the man.
Value Added
More than that, he seems to be on a one-person quest to show that active fund management really can add value.
Lest we forget (as if we would), Woodford turned a £10,000 investment into more than £114,000 over the 20 years he put his value philosophy into action at Invesco-Perpetual.
Sadly, I was a latecomer to his Invesco-Perpetual Income fund, but he still had time to triple my original investment.
I was a relative latecomer to his new vehicle, but it is still up more than 12% since I put some of my own cash in six months or so ago.
The Wrong Track?
Now, I’m a big fan of trackers, and hold far more money in low-cost passive FTSE 100, FTSE 250 and All-Share funds than I do with Woodford.
But when I look at the big man’s performance, I have to seriously question that strategy.
Birthday Boy
Woodford is a rare, almost unique breed, in the fact that he keeps on getting the big calls right.
He famously snubbed the technology boom. He exited the banks before the financial crisis. He dumped his entire Tesco stock while Warren Buffett was avidly filling his trolley.
And now he has trashed the FTSE 100 by primarily investing in stocks that are index stalwarts: AstraZeneca, Imperial Tobacco, British American Tobacco, GlaxoSmithKline, BT, Capita and BAE Systems.
One reason for his outperformance is that struggling sectors such as the oil majors, big banks and supermarkets are notable by their absence.
Better still, Woodford is only 55, and could have more than a decade of birthdays ahead of him before he hangs up his investment boots.
And that’s another reason for investors to celebrate today.